Caterpillar moved above the 200 day moving average this week to get out of the trench it was building.
This trench has been a gentle correction from a massive uptrend in 2017. The SCTR is returning to 75 which is a great signal of strength. Notice the SCTR behavior in 2017. The shaded area chart shows the $SPX relative strength moving to new 3-month highs.
Price is breaking above the channel with big volume. Lastly the momentum shown on the MACD has moved above zero. Looking left, that is a big change.
As long as it holds the 200 day moving average, this looks like a good place to find an entry. A move below the 200 would be a good place to have a stop execute.
Greg Schnell, CMT, MFTA
About the author:Greg Schnell, CMT, is a Senior Technical Analyst at StockCharts.com specializing in intermarket and commodities analysis. He is also the co-author of Stock Charts For Dummies (Wiley, 2018). Based in Calgary, Greg is a board member of the Canadian Society of Technical Analysts (CSTA) and the chairman of the CSTA Calgary chapter. He is an active member of both the CMT Association and the International Federation of Technical Analysts (IFTA).